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BBC: MPC To Do Nothing Today

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http://news.bbc.co.uk/1/hi/business/default.stm

UK rates 'to hold steady at 4.5%
'
The Bank of England is widely expected to leave rates unchanged for the 12th time in a row later.
Analysts predict the Bank will leave rates at 4.5%, despite increased talk that it will soon opt for a rise.
Experts say the Bank is likely to delay any rise in the face of an uncertain global economic outlook and the risk rising fuel prices pose to growth.
However, some analysts think rates could rise before the end of the year to help keep inflation in check.
Recent figures showed inflation unexpectedly surged to 2.5% in June
- above Bank targets of 2% - while
rising energy costs are expected to push inflation even higher.
Meanwhile, the
economy grew at its fastest rate for two years
in the second quarter of this year.

With inflation out of control no need to raise the rates then. :blink:

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Interesting that this was on their website at the same time Declan (on Breakfast News) was leading with a headline along the lines of "Interest rate decision on a knife edge - 50/50 chance of a rise"! They even interviewed a couple of city types who were stating that the MPC should raise today! They also showed a graph of interest rates over the last 15 years or so to show how high it was back in the early 90s (12%+)!!!

If they don't raise today, perhaps this is the beginning of a media drive to prepare the people for one next time around? :ph34r:

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I think I'm missing something.

The banks job is to control inflation. What it is effectively saying, if they remain at 4.5% is that it expects fuel prices to eventually come down, otherwise its all a bit of a mockery because rising fuel prices WILL lead to higher inflation eventually??

And if the banks main job is to keep inflation at 2%, WTF are they getting paid for if all they do is nothing??

It doesnt add up for me.

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How do they know? Perhaps it was 7-0 to hold last time that's given them a hint.

:rolleyes:

Isn't there another inflation report out soon?

More like they received the Treasury press release first thing this morning

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I think I'm missing something.

The banks job is to control inflation. What it is effectively saying, if they remain at 4.5% is that it expects fuel prices to eventually come down, otherwise its all a bit of a mockery because rising fuel prices WILL lead to higher inflation eventually??

And if the banks main job is to keep inflation at 2%, WTF are they getting paid for if all they do is nothing??

It doesnt add up for me.

The inflation taget is 2% +/- 1% that's why they can sit on their hands for a while. But will Gordon alter the target?

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The inflation taget is 2% +/- 1% that's why they can sit on their hands for a while. But will Gordon alter the target?

If push comes to shove, probably - this month would be a good time for Brown to move the goalposts - everyone on hols, WW3 kicking off, newspapers in silly season - Prescott-baiting

Edited by jp1

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Is oil likely to go down considering we are moving into Hurricane season?

Only in Browns "CPI-world" - in real world it tends to go up :D

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The inflation taget is 2% +/- 1% that's why they can sit on their hands for a while. But will Gordon alter the target?

Ok, but you'd of thought the MPC would be proactive rather than re-active and raise rates before inflation goes above the target.

If we dont raise them then, and everyone else is, theres only one way inflation can go?

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Guest X-QUORK

I read somewhere that rising unemployment is expected to temper the effects of rising energy costs on inflation, although it sounds like b0llocks to me.

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Unbelievable.

If BBC are right (and they always are).

I think we will be in for trouble now.

The only way we can get ourselves out of serious stick is if export goes up. (which can only be through services doing really well)

And an increase in public spending (which could do as much harm as good).

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I think I'm missing something.

The banks job is to control inflation. What it is effectively saying, if they remain at 4.5% is that it expects fuel prices to eventually come down, otherwise its all a bit of a mockery because rising fuel prices WILL lead to higher inflation eventually??

And if the banks main job is to keep inflation at 2%, WTF are they getting paid for if all they do is nothing??

It doesnt add up for me.

From this debate:

Lord Wakeham (one of the most connected people in the county) suspects that GB uses his 'financial stability' get out clause to influence the MPC

"we were interested in the concern and public emphasis that the Monetary Policy Committee has given to housing when house prices are not even included in the new consumer price index. That appears to be a concern that the Bank has over financial stability more generally, even though financial stability itself is not included in the Bank of England Act as one of its tasks. One might well ask what takes precedence in the eyes of the MPC—the inflation target or financial stability."

Lord Barnett reckons it's a treasury hit man in the corner:

"It is not sufficient for the Government to reply, as they did in paragraph 4 of their response to the report, that they have no comment at all because they believe in the operational independence of the Monetary Policy Committee. It is unbelievable that the Treasury does not have a view and does not express it to the Monetary Policy Committee. The Governor and the Chancellor of the Exchequer no longer have lunches; they apparently have breakfasts. One assumes that, other than discussing the weather, the Chancellor says a word or two about the economy to the Governor of the Bank of England. Maybe the Minister can tell us that he does not. I do not know what they talk about. A senior Treasury official is present at every Monetary Policy Committee meeting. Can my noble friend tell us whether he opens his mouth? Does he ever give the Treasury view of what it should or should not be considering? I find it incredible that it never discusses anything remotely concerned with the remit given to the Monetary Policy Committee."

I'm guessing that Gordon Brown's main tool for controlling the MPC is his mysterious 'financial stability' instructions, but if the most distinguished & connected Lords are kept in the dark, who can possibly know? The Bank of England is a private company 100% owned, and thus controlled, by the treasury. Those who believe in MPC independence are swallowing New Labour spin - there is no legislation that gives the MPC independence (not even so much as a memoranda of understanding). The number of strings available to puppet master Brown are numerous.

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The only way we can get ourselves out of serious stick is if export goes up.

Which IMO is Brown's plan [Labour like devaluing the Pound a la 70's]:

Move goalposts to 2.5% / 3% inflation target ["global reasons" and "stability"] > Pound falls > Exports pick up > imported inflation CPI "stability"

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Bank hikes rates to 4.75 percent Thu Aug 3, 2006 12:02 PM BST

LONDON (Reuters) - The Bank of England surprised financial markets by raising interest rates by a quarter percentage point to 4.75 percent on Thursday to tackle above-target inflation.

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Bank hikes rates to 4.75 percent Thu Aug 3, 2006 12:02 PM BST

LONDON (Reuters) - The Bank of England surprised financial markets by raising interest rates by a quarter percentage point to 4.75 percent on Thursday to tackle above-target inflation.

What (in theory) will this rate rise do to infaltion now?

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Inflation is anyones guess . HPI I see the beginning of a decline.

( All being well !!) Yippeeeeeeee !!

It will take a few months to feed through though!!

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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